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Super Bowl Is Super Subsidized

In light of the upcoming Super Bowl, I had a curious thought – should taxpayers be footing part of the bill for a quarterback’s salary? Allow me to explain…

It is likely that the stadium in which the Super Bowl (and most professional athletic games in America, for that matter) will be played is leveraged with municipal-backed debt. A majority of flashy new stadiums, coliseums, ballparks, and rinks around the country were financed with taxpayer-backed securities. Team ownership often insists that its team requires more revenue-generating box seats and modern facilities, and then threatens to relocate if the local government doesn’t approve lending at rock-bottom subsidized rates for the construction costs. Municipalities mostly fall for the threat, even if there’s little chance of a team uprooting itself. In fact, there really aren’t any cities left for relocation. Ironic enough, when Tampa built a facility with taxpayer dollars on a speculative basis, it sat vacant for years. When residents of my hometown of Columbus, OH refused recently to pass a levy to increase sales taxes to fund a hockey stadium, the team didn’t balk and eventually paid for the entire new facility with private dollars.

I was disappointed to hear of the Washington, DC’s capitulation a few weeks ago to fund nearly $400 million in baseball stadium financing. In fact, there isn’t even a decent grocery store within miles of the site, despite the number of upper-income households in nearby Capital Hill. Why is the city blind to funding meaningful initiatives that lead to better neighborhoods like improved schools, retail, and recreational facilities? These types of amenities attract new residents, increase property tax revenue, and transform neighborhoods. Joel Kotkin, an authority on urban studies, observed that one must wander merely two blocks from new publicly-subsidized stadiums in Detroit, Baltimore, Houston, Cleveland, and St. Louis to witness a sort of Potemkin falseness. Urban decay and poverty are still within a stone’s throw of these facilities, whose fans shuttle in from the suburbs a few times per year to park their cars and maybe grab a beer or lunch across the street.

Reports funded by cities or sports teams attempt to hypothesize positive economic impacts of new sports facilities by quantifying spillover effects in adjoining neighborhood revitalization, augmented income taxes from player salaries, and sales tax receipts. Yet independent economists have proven zero or negative value for a vast majority of these projects, since much of the superlative revenue ends up going back to service taxpayer-funded debt payments for the facilities.

Are municipal subsidies better spent elsewhere? Cities like Santa Fe, Portland, Burlington, Milwaukee, and Miami committed money that could have been spent on sports funding instead on cultural and arts initiatives that have resulted in dramatically-increased tourism and genuine neighborhood revitalization. The Harvard Business Review recently lauded researcher Richard Florida’s efforts to quantify the economic impact of cultural investment in attracting creative individuals to emerging neighborhoods. Florida’s “top breakthrough idea in 2004” posited that progress in community development is a grassroots effort in funding neighborhood retail and arts facilities that attract upper-income and non-traditional professionals instead of municipal subsidies for mega-project convention centers and stadiums.

So when you are watching Sunday’s game, keep in mind that the public effectively is paying quite a bit of players’ salaries. Dollars that should have come from team coffers to fund facility construction is instead used to pay enormous pay packages. If cities cannot afford to modernize urban schools or help provide adequate neighborhood amenities, how can we justify a redistribution of wealth to super-rich players and team owners?

January 31, 2005
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